Raj Bir Singh, Chandigarh V. DCIT, Chandigarh

ITA 1079/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60851 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-05-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 26-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S K MUKHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, J M ITAS NO. 1078 TO 1084/CHD/2012 ASSESSMENT YEAR : 2003-04 TO 2009-10 RAJ BIR SINGH V D.C.I.T. CENTRAL CIRCLE I H NO. 152 CHANDIGARH SECTOR 9B CHANDIGARH ABZPS 6057 P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K. MUKHI RESPONDENT BY: SHRI MANJIT SINGH DATE OF HEARING 21.5.2013 DATE OF PRONOUNCEMENT .5.2013 O R D E R PER BENCH THESE APPEALS ARE DIRECTED AGAINST THE ORDERS PASSE D BY THE LD. CIT(A)(CENTRAL), GURGAON DATED 26.9.2012. 2. IN ALL THESE APPEAL THE ASSESSEE HAS RAISED IDEN TICAL GROUNDS BUT FRAMED THE SAME IN A VERY STRANGE WAY, THEREFORE, THE LD. COUNSEL OF THE ASSESSEE AT THE TIME OF HEAR ING, SUBMITTED THAT ONLY DISPUTE INVOLVED IS REGARDING D ISALLOWANCE OF INTEREST PAID ON LOANS TAKEN BY THE ASSESSEE WHI CH HAVE BEEN INVESTED IN THE FIRM. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE HAS TAKEN CERTAIN LOANS WHICH WERE INVESTED IN THE FIRM . HOWEVER, THE ASSESSEE COULD NOT PROVE THE NEXUS BETWEEN THE AMOUNT 2 INVESTED AND THE AMOUNT BORROWED AND ACCORDINGLY T HE INTEREST ON SUCH LOANS STANDS DISALLOWED. 4. BEFORE US, IT WAS SUBMITTED THAT IDENTICAL ISSUE CAME UP F OR CONSIDERATION BEFORE THE TRIBUNAL IN ITAS NO. 10 92 TO 1098/CHD/2012 IN CASE OF AMAR BIR SINGH V DCIT BY W HICH ORDERS HAVE BEEN REMANDED BACK TO THE ASSESSING OFF ICER TO VERIFY THE NEXUS. IT WAS FURTHER SUBMITTED THAT SI NCE THE ISSUE IS IDENTICAL, THEREFORE, THE DECISION IN CASE OF AMAR BIR SINGH V DCIT (SUPRA) MAY BE FOLLOWED. 5 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STR ONGLY SUPPORTED THE ORDER OF LD. CIT(A). 6 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT IDENTICAL ISSUE CAME UP BEFORE THE TRIBUNAL AND TH E SAME WAS ADJUDICATED VIDE PARA 5 WHICH IS AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND THAT THOUGH IN CASE OF ANOTHER PARTNER I.E. SMT. M OHINI SINGH V DCIT (SUPRA) THIS ISSUE HAS BEEN SET ASIDE FOR RE- EXAMIANTION BUT IN SOME OF THE YEARS IT WAS NOTICED THAT INTEREST EXPENDITURE IS MORE THAN THE INTEREST INCO ME WHICH IS NOT POSSIBLE. FOR EXAMPLE IN ASSESSMENT Y EAR 2008-09 INTEREST INCOME EARNED BY THE ASSESSEE IS R S. 2,30,156/- AS PER PAGE 17 OF THE PAPER BOOK WHEREAS THE INTEREST PAID TO OTHERS IS RS. 1,91,713/- AND INTER EST PAID TO BANK IS RS. 1,54,336/- TOTALING RS. 3,46,049/-. WHEN THIS WAS POINTED OUT TO THE LD. COUNSEL OF THE ASSE SSEE HE FAIRLY CONCEDED THAT IN NO CASE DEDUCTION ON ACCOUN T OF INTEREST COULD EXCEED THE INTEREST INCOME. THE TRI BUNAL HAS SET ASIDE THE MATTER TO THE FILE OF ASSESSING O FFICER FOR RE-EXAMINATION OF THE MATTER BASICALLY TO EXAMI NE THE NEXUS. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF ASSESS ING OFFICER FOR RE-EXAMINATION OF THE ISSUE WITH A DIRE CTION TO ALLOW INTEREST, IF THE NEXUS IS PROVED. HOWEVER, I N NO CASE ALLOWANCE OF INTEREST SHOULD BE ALLOWED TO EXC EED THE INTEREST INCOME EARNED BY THE ASSESSEE FROM THE FIRM WHERE HE IS PARTNER. 3 FOLLOWING THE ABOVE WE HAVE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE ISSUE BACK TO THE FILE OF ASS ESSING OFFICER WITH IDENTICAL DIRECTION. 7 IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 21.5.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.5.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR